Shanks chief says it will recycle more rubbish as landfill costs rise

The chief executive of Shanks Group committed the British waste management company yesterday to recycling more of its rubbish as it reported that profits in its UK business had more than doubled.

Britain is one of the biggest users of landfill sites in Europe but taxes have made it more expensive to bury waste while a European Union directive has reduced the amount of waste that councils can send to landfill sites. Local authorities have become increasingly reliant on the private sector to handle household waste, creating a booming market involving billions of pounds in government-backed private finance initiative projects.

The landfill tax on waste rose to £24 a tonne last month and is set to increase to £48 by 2010, raising demand for environmentally friendly waste disposal, such as recycling. This has boosted Shanks's UK business and profits soared 109% to £6.9m in the year to the end of March. Group headline pre-tax profit rose 11% to £44.8m.

Tom Drury, group chief executive, said: "From being very cheap, landfill is getting expensive and will get more expensive as the government raises [the landfill tax]. For companies like Shanks it is now economic to use our European model to recycle and reprocess the waste."

Shanks dumps just under three-quarters of its waste in UK landfill sites and recycles about 27%. However, Drury said the company was keen to import techniques used in greener Dutch and Belgian subsidiaries, which recycle 83% and 51% of their waste respectively.

He added that Shanks was planning to build about half a dozen recycling and reprocessing centres in the UK.

Shanks is also keen to increase the use of a natural waste treatment process, known as anaerobic digestion, in which micro-organisms digest organic waste to produce methane, which can be used as fuel to generate electricity.

However, Michael Warhurst, senior waste and resources campaigner at Friends of the Earth, said waste management companies had little incentive to increase recycling while still making big profits from landfill sites.

"The waste industry has been very conservative and has tended to push things it is used to, such as landfills," he said. "Then they say let's go for incineration, which doesn't make sense from a climate point of view and is very expensive for local government, but the waste industry makes quite a nice profit from it.

"There is money [in recycling]; it is just a question of whether the waste management industry can change their mindsets towards quality recycling."